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                                                                   Exhibit  10.7


     The following amendments to the referenced sections of the Restricted Stock
Election Plan were adopted by the Board of Directors of Arcadia Financial LTD.
Effective as of January 29, 1998:

     2.2  "AWARD CYCLE" means the period of time from the first day of a Plan
          Year in which a Participant is granted a Restricted Stock Award until
          the last day of that Plan Year in which restrictions on that
          Restricted Stock Award may lapse due to the accelerated vesting of the
          Restricted Stock Award as a result of meeting annual target
          performance goals for the Company's fiscal years between July 1, 1994
          and December 31, 2000.
     
     4.1  INCENTIVE BONUS.  Each eligible associate shall be eligible for a
          bonus each fiscal year of the Company from July 1, 1994 through
          December 31, 2000 in an amount determined by the Board of Directors or
          its delegee.  Each of these annual bonuses is intended to reward
          eligible associates for achieving pre-determined performance targets
          determined by the Board of Directors or its delegee.


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     4.2  ELECTION.  Each eligible associate shall be permitted to make an
          irrevocable election that a portion of such associate's bonuses for
          fiscal years 1994-2000 shall be received in the form of Common Stock. 
          To participate in the Plan, the associate shall execute and submit to
          the Committee or its representative an election form no later than
          thirty (30) days following the date the associate was first informed
          of his or her eligibility to participate.

     5.2  ACCELERATED VESTING.  If at the end of 1994, 1995, 1996 or 1997 any
          Active , Retired or Deceased Participant has achieved the annual
          target performance goals established by the Board of Directors or its
          delegee for the relevant fiscal year, vesting of a portion of the
          Participant's Restricted Stock Awards shall be accelerated.  For each
          such fiscal year of the Company, an Active Participant shall vest in
          the number of shares determined under the following formula:  the
          lesser of (i) the target cash bonus for such year, or (ii) the cash
          bonus actually earned for that year, times the percentage elected to
          be received in the form of Common Stock pursuant to Section 4.2
          hereof, divided by the market price of the Common Stock used to
          determine the number of Restricted Stock Award shares granted to such
          Active Participant (rounded down to the nearest whole number of
          shares).

          All Restricted Stock Award shares of an Active Participant which have
          not vested as of the end of 1997 (the "Unvested Shares") shall remain
          subject to accelerated vesting pursuant to the terms of this
          paragraph.  For each of 1998, 1999 and 2000, an Active Participant
          shall vest in the number of shares of the Unvested Shares determined
          by the Committee as follows: (i) such accelerated vesting shall be
          based upon Participants' achievement of criteria established by the
          Committee and management, the Company's overall performance and such
          other criteria as the Committee shall from time to time determine;
          (ii) the targeted vesting thereof shall be in thirds; provided
          however, more or less than such thirds may be vested at the
          Committee's discretion; (iii) all such shares not vested in 1998, 1999
          or 2000 shall vest upon the expiration of ten years from the date of
          the grant thereof subject to the provisions of the Plan, as amended,
          and (iv) such vesting shall be subject to forfeiture as required by
          the terms of the Plan, as amended.